Ag economist: Thanksgiving dinner prices continue to rise

November 13, 2012  


WEST LAFAYETTE, Ind. - Consumers preparing turkey dinners should expect to pay a little more for Thanksgiving staples this holiday season, a Purdue University agricultural economist says.

Corinne Alexander said holiday shoppers face moderate increases in food prices, but those increases are building on sharp rises from previous years.

"It's not a one-year story," she said. "Grocery store food price increases of 0.8 percent in September 2012 are building on the 6.3 percent increase in September 2011.

Alexander expects food prices to continue to increase in 2013.

"Commodity grain prices are at record levels because of the 2012 drought in the Midwest," she said. "Livestock and dairy producers continue to reduce their herds and, as a result, consumers will see higher prices for meat and dairy products in 2013."

Alexander said the increase in overall food prices makes items such as sugar, flour, eggs, milk, rolls and bread for stuffing more expensive this holiday season.

There will be an adequate amount of turkeys because supplies of whole turkeys are 12 percent higher than 2011, she said.

The U.S. Department of Agriculture predicts wholesale prices for Eastern market whole turkeys will be between $1.10 and $1.14 per pound in the final quarter of the year, compared with $1.11 per pound in 2011.

The price paid at the checkout will depend on whether consumers buy whole or turkey parts, frozen or fresh birds, precooked or complete turkey meals, brand names and the value of store coupons or price specials.

It's not uncommon to see turkeys below wholesale prices because supermarkets often discount turkeys for the holiday season, knowing shoppers will buy all the trimmings too, Alexander said.

"Turkey is often priced as a loss leader, and many stores will feature turkeys at below cost or offer specials for frequent shoppers or big birds," she said.

Fresh birds will be priced higher than frozen birds because the price of fresh turkeys is more sensitive to increases in wholesale prices. Poultry wholesale prices can respond faster to changes in production costs, such as feed, so consumers already are seeing price increases as a result of the 2012 drought.

While the trend of food prices for a Thanksgiving dinner is higher this year, prices for both sweet potatoes and white potatoes will be substantially less than in 2011 because the USDA is reporting ample supplies of both crops.

"Last year we had very high inflation in fruits and vegetables because there were production problems. Even with all the problems of the drought this year, growing seasons have been much better," Alexander said.

Prices for cranberries are expected to be on par with those of last year because the demand is high and producers are expecting only a 1 percent decrease in production from 2011.

Gasoline prices continue to rise, making holiday trips even more expensive. But other energy prices are lower than a year ago, so Thanksgiving dinner will cost less to prepare. Alexander said electricity prices are down about 1.5 percent, and natural gas prices are about 8 percent lower than last fall.

Most Americans spend about 10 percent of their average annual incomes for food, but some spend more for their annual Thanksgiving dinners.

Writer: Amanda Gee, 765-494-8402, agee@purdue.edu

Source: Corinne Alexander, 765-494-4249, cealexan@purdue.edu

Ag Communications: (765) 494-2722;
Keith Robinson, robins89@purdue.edu
Agriculture News Page

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